LUVFINANCE, Inc. is estimating its WACC. It is operating at its optimal capital structure. Its outstanding bonds have a 12 percent coupon, paid semiannually, a current maturity of 17 years, and sell for $1,162. It has 100,000 bonds outstanding. The firm can issue new 20-year maturity semiannual bonds at par but will incur flotation costs of $50 per bond (Hir the coupon rate on the new bonds = the YTM on existing bonds). The firr could sell, at par, $100 preferred stock that pays a 12 percent annual dividend that is currently selling for $120. The firm currently has 1,000,00

Question
LUVFINANCE, Inc. is estimating its WACC. It is operating at its optimal
capital structure. Its outstanding bonds have a 12 percent coupon, paid
semiannually, a current maturity of 17 years, and sell for $1,162. It has
100,000 bonds outstanding. The firm can issue new 20-year maturity
semiannual bonds at par but will incur flotation costs of $50 per bond (Hir
the coupon rate on the new bonds = the YTM on existing bonds). The firr
could sell, at par, $100 preferred stock that pays a 12 percent annual
dividend that is currently selling for $120. The firm currently has 1,000,00
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LUVFINANCE, Inc. is estimating its WACC. It is operating at its optimal capital structure. Its outstanding bonds have a 12 percent coupon, paid semiannually, a current maturity of 17 years, and sell for $1,162. It has 100,000 bonds outstanding. The firm can issue new 20-year maturity semiannual bonds at par but will incur flotation costs of $50 per bond (Hir the coupon rate on the new bonds = the YTM on existing bonds). The firr could sell, at par, $100 preferred stock that pays a 12 percent annual dividend that is currently selling for $120. The firm currently has 1,000,00

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Long term debt financing

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